Friday, April 19, 2024

Borneo RISING

Borneo is often touted as a “mystical island” and famed for its many natural wonders such as its rainforest, which is believed to be over 130 million years old, and of course the flora and fauna found within it. But more than its ecological splendour and wealth of resources, Borneo also has the potential to become the epicentre of Southeast Asia’s economic development.

What makes Borneo such a promising region is it strategic location in the heart of maritime Southeast Asia, with air and sea connections to major cities in Asia. It is also the only island in the world that is shared by three different nations – Malaysia, Indonesia and Brunei. As a result, there are five territories on the main Borneo island – Sarawak and Sabah in Malaysia, Kalimantan in Indonesia and Brunei.

International Business Review takes a look at the individual development plans for each of these areas in Borneo, and how – when taken as a whole – they will help propel Borneo to the top.

Reinventing Brunei

We start off in Brunei Darussalam. Located at the northern part of the Malaysian state of Sarawak, Brunei is the smallest and least populated part of Borneo, with a land size of just 5,765 sq km and a population of just over 460,000 people.

But what Brunei lacks in size, it more than makes up for in terms of wealth. Its GDP per capita according to purchasing power parity (PPP) is the second highest in Southeast Asia (behind Singapore) and the 12th highest in the world at US$75,583 as of 2023.

That wealth has come primarily from its oil and gas industry, and it is the ninth largest producer of liquefied natural gas (LNG) in the world. However, hydrocarbons are finite and this is something that the Brunei government has recognised. As such, in 2004, the Sultan of Brunei HM Sultan Hassanal Bolkiah formed the Council for Long-Term Development Planning to come up with a vision and strategy for Brunei’s future growth.

“Wawasan has charted the country’s future direction, guiding a more systematic plan to lead to a country that has highly educated and skilled yet successful, quality citizens and has a dynamic yet resilient economy.” – HM Sultan Hassanal Bolkiah,
The Sultan of Brunei

The Council’s studies and deliberations over the course of three years were manifested in Wawasan Brunei 2035 (WB 2035 – Brunei Vision 2035). Under this master plan, Brunei aims to establish a reputation for having an educated and highly-skilled workforce, a high standard of living ranking among the top 10 nations in the world, and to be one of the top 10 economies in the world by 2035.

WB 2035 has identified eight strategies to realise these objectives. Under the education strategy, it aims to enhance education outcomes to ensure that Bruneian students are able to meet the demands of a knowledge-based economy. The plan also aims to divest Brunei’s economy away from oil and gas by increasing investments in other sectors. Another strategy is to further boost SME growth in order to develop the capabilities of Brunei’s majority Malay community. In addition, the country is looking to upgrade its infrastructure – particularly in areas of industry, education, and health.

Pulau Muara Besar in Brunei is home to the PMB Refinery operated by the Hengyi company, which is expected to contribute US$1.33 billion to Brunei’s GDP.

Driving Sarawak to the Future

Across the border from Brunei, we arrive in the Malaysian state of Sarawak. It is already one of the largest economies in the country, with a GDP per PPP of US$88.709 billion (the third highest in Malaysia) and a GDP per capita (PPP) of US$ 51,175 (the third highest in Malaysia).

In the wake of the global COVID-19 pandemic which broke out in 2020, the Sarawak government decided that a comprehensive plan is needed to move the State forward. The aim is for Sarawak to capitalise on trends such

as globalisation, supply chain resilience, digitalisation, the new industrial revolution, circular economy and a low carbon economy.

This has resulted in the Post COVID-19 Development Strategy 2030 (PCDS 2030) which aims to transform Sarawak into “a thriving society driven by data and innovation where everyone enjoys economic prosperity, social inclusivity and sustainable environment” by 2030.

Six economic sectors have been identified as key to realising the goals of PCDS 2030. For instance, Sarawak aims to be positioned as a preferred investment destination for the manufacturing sector. It also seeks to increase its capabilities and productivity in agriculture and food manufacturing in order to become a major food exporter.

In addition, Sarawak is looking to be a leading destination for eco-tourism and business events in Southeast Asia. It also aims to strengthen the timber industry while being recognised for its sustainable management of its forest and biodiversity conservation.

Mining is another focus area of the PCDS 2030, and among the minerals that Sarawak aims to develop high value activities for are silica sand, rare earth elements and kaolin clay. And last but not least, it aims to build up its social services to provide a high living standard of living for Sarawakians.

The PCDS 2030 has also identified seven enablers which are digital transformation, innovation, education & human capital, basic infrastructure, utilities, transport, and renewable energy. By focusing on these enablers and industrial sectors, Sarawak hopes to grow its economy by eight percent by annum, thus increasing its GDP from RM136 billion in 2019 to RM282 billion by 2030.

A Progressive Sabah

Our next destination is Sabah. Located at the northernmost tip of Borneo, Sabah is the sixth largest economy in Malaysia with a GDP per PPP of US$51.855 billion. However, its GDP per capita of US$22,797 (PPP) is the fifth lowest in the country.

The Sabah State government seeks to address this discrepancy, which is why, in 2021, it introduced the Sabah Maju Jaya (SMJ) Development Plan. The Plan is divided into three main focus areas – S for economic growth comprising agriculture, industrial and tourism, M for human capital and the people’s well-being, and J for network infrastructure and sustainability.

These focus areas are supported by five enablers, namely Fiscal Sustainability, Financial Convenience, Effective & Efficient Delivery, Excellent Governance with Integrity, and Digital Government Based on Technology &

Innovation Implementation. All in all, the SMJ Development Plan, which runs from 2021 to 2025 has a total of 573 initiatives.

Since the Plan came into effect, a number of high-valued investments have made their way into Sabah. These include an RM4.28 – billion investment by the South Korean firm SK Nexilis to build a copper foil manufacturing plant in the Kota Kinabalu Industrial Park (KKIP). Another major investment is a RM2 billion outlay by Chinese firm SBH Kibing Solar New Materials to build solar panel manufacturing and sand processing factories. The last major investment is an RM620 million project by Linaco Group to manufacture coconut-based products.

In total, these three projects are expected to create up to 12,750 new jobs for the people of Sabah. The Plan has also been instrumental in increasing Sabah’s finances. This is reflected in the fact that in 2021 – the first year of implementation – Sabah’s revenue collection increase by 51.74 percent to RM5.449 billion and then by another 27.75 percent to RM6.96 billion in 2022.

“While COVID-19 has caused many upsets and challenges to the socio-economic norms, the change also presents and unlock new opportunities for Sarawak to forge ahead for a brighter future.”– YAB Datuk Patinggi Tan Sri Abang Johari Tun Abang Openg,
The Premier of Sarawak

Nusantara Excites the World

Our next and final stop in our tour of Borneo takes us to Indonesia, specifically to the province of East Kalimantan. This is the site of one of the most ambitious and exciting projects, not only in Borneo and Indonesia but perhaps also the whole of Southeast Asia.

This is the Nusantara Capital City (IKN) project, in which Indonesia plans to move its capital city from Jakarta on Java island to Nusantara in Borneo. First mooted by Indonesian President Joko “Jokowi) Widodo in 2017, the reason for doing so is because Jakarta is already overdeveloped and overcrowded. In addition, the city itself is susceptible to natural disasters such as earthquakes.

The Indonesian government aims for Nusantara to be a green and smart city, and it will have six economic clusters which are Clean Technology, Integrated Pharmaceutical, Sustainable Agriculture, Ecotourism and Health Tourism, Chemical Products and By-Products, and Low Carbon Energy. The entire area will span 2,560 sq km, of which 70 percent will be a green area.

Valued at US$35 billion, the development of Nusantara is divided into five phases with the first phase having started in 2022 and expected to be completed by 17 August 2024 – in time for Indonesia’s national day. As part of this phase, the Government Central Area zone is being developed with plans for it to house government offices, schools and hospitals. The entire city is scheduled to be completed by 2045.

Nusantara is set to be the driving force for Indonesia’s plans to become a top five global economy by the year 2045. The country is already the only Southeast Asian nation in the G20 group of 20 largest economies and President Jokowi aims for Nusantara to be a magnet for global talent and a centre of innovation.

An artist’s impression of Nusantara, Indonesia’s new capital city in Kalimantan, Borneo. Nusantara is expected to be a green and smart city, and is set to be completed by 2040.

Borneo is definitely a region to look out for, as each stakeholder is playing their part to uplifting the island so that it can realise its potential. And on 3 November this year, International Business Review will celebrate the very best of Borneo at the inaugural IBR Borneo Awards, taking place in Kuching, Sarawak.

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